Strategy for the Telecommunications, Media and Technology industries

Facebook’s strategy: Live and Connected

There were two announcements at Facebook’s F8 conference back in April that tell us a lot about Facebook’s strategy. As a social media platform it has traditionally been a a digital ‘destination’. I’ve written previously about how platforms like YouTube and Facebook are winning your ‘boredom’ time (e.g. on the bus, in a queue). However, Facebook is moving well and truly pass just being a destination – it wants to be the internet.

The company’s goal (under its purpose of connecting the world) appears to be that when you connect to the digital world you do it with Facebook whether through its platform (including commerce/bots), its mobile apps (Whatsapp, Instagram), virtual reality, instant articles (for news), Facebook Live for live events or further down the stack into connectivity assets (Terragraph, ARIES). It is these last two ‘where to play’ and ‘how to win’ choices that signify the change from destination to a full service ‘connectivity’ provider. This post looks at the strategy behind Facebook Live and Facebook’s connectivity assets and the potential impact to the media and telecommunications industries.

Facebook Live

Facebook Live and relevance

As far as live video goes, Snapchat, Twitter (to a certain extent) and YouTube were into live video streaming well before Facebook. Facebook Live, which allows you to view live feeds from your friends as well as celebrities and news organisations, is a response ‘me too’ offering in its basic form (it even looks and feels like Snapchat). Where Snapchat has been successful with ‘millennial’ audiences, Facebook is also trying to appeal to the next generations by adding this live video feature. In Mark Zuckerberg’s own words: “support whatever the most personal and emotional and raw and visceral ways people want to communicate are as time goes on”. Facebook needs to continue to be relevant to the next generations so expect more acquisitions or ‘me too’ products that appeal to next generations (e.g. a Facebook response to Pokemon Go!?).

Facebook Live and the news

Despite it being a ‘me too’ product, Facebook Live represents much more than this particularly when it is considered in concert with its publishing product Instant Articles. As part of its move from being a destination to being a provider of connectivity, Facebook is aiming to control more of the ways people experience the news. The destination websites of the past (e.g. publishers) are now being encouraged by Facebook to present their stories wholly inside the platform.

There was recent news that Facebook is paying media outlets like HuffPost, BuzzFeed and publisher Condé Nast to post live video. It is also likely to get into creating content of its own. This presents an interesting relationship between Facebook’s business model and ‘impartiality’ in news. The risk is that Facebook’s control over what people see online (particularly news) is becoming increasingly strong. Before Live, Facebook could claim to be neutral simply by serving up 3rd party content. Now with live video, and users (and Facebook’s) ability to create content, it is no longer just 3rd party content it is serving up Facebook starts to become the news. This is a strong challenge to Facebook’s impartiality in journalism.

Facebook’s connectivity assets

Google is building fibre assets and connectivity balloons and Facebook’s response is small cell wireless technology, antennas and satellites. For both companies these ventures represent attempts to own the ‘last mile’ of connectivity to users from high speed (>1GB speed) internet to the applications used on mobile devices (Facebook’s attempt at a phone was as successful as the Google’s Nexus). Let’s look at Facebook’s plans.

Terragraph and ARIES

According to Facebook Engineering VP Jay Parikh, the Terragraph system is a “multi-node wireless system focused on bringing high-speed (~2Gbps) internet connectivity to dense urban areas…(it is) a distribution network to replace fiber in these dense urban areas.” Terragraph transmits data in the millimeter wave spectrum based on the WiGig open standard. This allows third-party hardware to be built with Terragraph-friendly antennae (this could include cars and phones). Facebook is currently running tests with the technology (which requires line of sight to work) in San Jose along with its ARIES antennae. ARIES is a single-base station with 96 different directional antennae. It is able to pick up 24 different devices on each band of spectrum by eliminating noise. The implication is that it will be able to transmit far greater amounts of data on spectrum than current antennae.

Connectivity asset implications

Facebook’s connectivity assets have two major implications on connectivity markets. Firstly, if deployed strategically with broadband connectivity they could be disruptive in connectivity markets like Australia or emerging markets where GB speed internet is relatively uncommon or unheard of. Secondly, by being the ‘last mile’ it could subsidise connection to the higher speed by locking people into the platform for their connectivity needs – literally a ‘Facebook RSP/MVNO’. The one thing stopping GB speed internet from being in high demand is a high demand use case. Demand for GB speed internet has not hit fever pitch but the ‘killer’ use cases are likely to be in Facebook’s sweet spot including mainstream virtual reality (Oculus) and 8K video (Facebook Live). Facebook is positioning itself to be an enabler of these use cases in terms of connectivity and platform.

Facebook’s strategy has moved well and truly beyond being just a digital destination. It is fast becoming a connectivity ‘one-stop-shop’ for the future. Its Facebook Live product and connectivity asset strategy set it up to not only own the ecosystem on your mobile but to be the news creator and aggregator (for your friends and the world) as well as the last mile of high-speed connectivity.